China flexes muscle with economic sanctions over dispute with Japan

Anti-Japanese protests across China may have toned down but Beijing has shown that it is determined to act when it said Japan “must take responsibility” for its “farcical” behaviour, Asahi Shimbun reports.

Mounting tensions over contested waters in the East China Sea have damaged relations between the two Asian superpowers, particularly risking their economic ties. Anti-Japanese protests became increasingly violent, forcing several Japanese retail stores and factories to halt operations as Chinese patriots threatened to attack them. Operations resumed Thursday after Chinese authorities prohibited further protests.

China Central Television reported Wednesday that the Ministry of Land and Resources will cut 40% of the list of companies licensed to mine rare earth, in a move to intimidate Japan on how far Beijing is willing to risk relations with its trade partner. China, the world’s largest rare earth minerals producer, restricted exports of rare earths to Japan in 2010 following a brush between the Japan Coast Guard and a Chinese trawler off the Senkaku Islands. Japanese manufacturers felt the blow of the ban and released the Chinese ship soon after. Chinese consumers have also shunned Japanese products, according to local media.

US Defense Secretary Leon Panetta met with Chinese president-in-waiting Xi Jinping in Beijing and appealed for a peaceful resolution. Mr. Xi was quoted as saying, “Japan should draw in its reins before falling off a cliff and stop all the mistakes that undermine China’s sovereignty and territorial integrity”.